Giusi La Rocca
CIO Advisory, Financial Services
PwC Switzerland
In PwC’s 2023 Cloud Business Survey, 78% of respondents said their company had adopted the cloud in most or all parts of their business. But more than half failed to realise desired outcomes such as cutting costs, improving resilience and driving new revenue. Why is tangible value elusive for so many?
The reality is that unexpected costs are one of the major challenges companies have to overcome while transitioning to the cloud. We’ve observed that companies that invest time in understanding why they’re actually migrating to the cloud and what the benefits are they want to achieve, succeed more often than others. How can you budget your journey to the cloud more realistically?
Even though companies define their cloud goals, they fail to achieve the expected cost savings because of a lack of a clear cloud vision and strategy. Although hyperscalers have great tool sets to help to predict future costs in the cloud, more than 50% of companies fail to realistically plan these expenses and end up running into unexpected or unplanned run costs owing to coexistence and other dependencies. While the benefits of the public cloud are well understood, there are still concerns and challenges to overcome. It’s important to consider the change in culture required, as well as factors such as organisational readiness and upskilling needs. Many companies lack a cloud target operating model that would enable them to take these factors into account.
Manage the capacity stretch.
Build an effective team.
Define a clear migration strategy.
Consider all expenses up-front.
Cloud-powered companies are four times more likely to say they face no barriers to achieving value from their cloud transformation. We’ve identified the four main ingredients of their recipe for successful cloud transition:
A clear vision and strategy sets the top-down direction. It addresses the question of why you’re migrating to the cloud in the first place and provides guiding principles regarding the target state. It’s crucial for senior management to communicate about where the journey will go and set down, for example, criteria for fast decisions, a clear definition of added value, and targeted benefits. A common understanding of the target state will allow application teams to better plan their capacity and reduce migration efforts, ultimately resulting in a transparent business case.
Getting the necessary buy-in from the application owners in terms of the targeted benefits. Estimating the effort required toward to clear targes, allows more predictable calculation of project budgets and a realistic transitioning schedule. Identifying the pain points that need to be addressed and giving them a price tag provides a transparent total cost of ownership of the relevant applications. The added value and the potential impact on cost become measurable.
It’s crucial for companies to understand that data is at the heart of transformation efforts and address the all-too common issue of siloed — and mushrooming — data that’s not only untapped but ungoverned. Cloud-powered companies are much more likely than others to have an enterprise-wide data strategy (88% versus 59%). This means they develop a streamlined architecture to modernise their data into an integrated view, create governance structures and concentrate on building the skills and operational changes needed to become a data-driven organisation.
It’s important to define a cloud target operating model that enriches and expands the current IT TOM with the capabilities and procedures required to operate the cloud securely and efficiently. Clear roles and responsibilities reduce friction in BAU (business as usual) processes. It’s also important to demarcate services clearly. This sounds straightforward, but we observe that application teams and cloud providers have a different understanding of what responsibilities and duties are entailed.
Boiling it down to the essentials, the first and most important thing when you're planning your cloud transformation is a clear vision and strategy. This should then be followed by a cloud target operating model along with a cloud data and AI strategy.
Reach out to us for your first conversation on how you can create value through cloud transformation. We have the experience to help you identify which of the benefits of the cloud will deliver true added value to your business and make your cloud value creation measurable (September 2022, IDC #US48187622).
We would be delighted to hearing from you.
https://pages.pwc.ch/core-contact-page?form_id=7014L000000DZm0QAG&embed=true
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Giusi La Rocca
Driton Thaqi
